Rethinking Marketing

You want to improve your performance. That’s a given. There are usually only three ways to do it. First, you can increase sales at the same price. That will increase profitability on a straight line, but it will also increase production efficiency.

Second you can sell the same number of products at a higher price. That will not increase production efficiency but will increase profits.

Third, you can sell more products at a higher price. That will increase profits and efficiency and lead to the best of all possible worlds.

But the real world is a little messier. Someone is always throwing a wrench into the gears. So you need to have a strategy that doesn’t allow for tweaking because the tweaking is already into the game from the very beginning. The way you do that is to design the product after you have (theoretically) asked the customer what they need, what improvements they would want, how much it should cost and how many they will buy over any given period of time.

Then you start.

Let’s just take a theoretical product…a car with good mileage. Your initial assumption is that there is a market for a car that has better mileage than those currently on the market. Let’s also make another assumption. Let’s say that this is interesting because there are numerous relatively efficient auto plants and workers available and incentives for this kind of business.

So, in this particular case, you ask all the questions you can about all the cars now on the market. You catalog all the favorite features. You find out what targets you have to hit on mileage, size, amenities and price. Then you make the product. Hopefully you will have covered everything. If, for some reason, an unanticipated problem arises, we assume that you have set up the structure for a quick-response customer service department and appropriate risk management.

Not only can you do this, but many major corporations do this successfully right now. Coke does it. Pepsi does it. GE does it.

Southwest Airlines is probably a good example of a company that asked…what do people want in an airline? And for that segment of the market that wanted to get from one place to another in the simplest, safest, least complicated way…they provided a valuable service.

Starbuck’s was a company built on a premise. Howard Schultz noticed that the number of people coming into a small shop where coffee beans were roasted in a certain way actually came in to buy a cup of coffee. He studied the situation and intuited that there was a market. So he studied coffee shops in places where they were already very popular, even a way of life.

He created a coffee shop that met the same needs and wants as those of the customers of hugely popular coffee shops. His gamble…one that paid off…was that people are the same in certain respects here in the U.S. as they are in Europe. He gambled on the fact that what he had originally seen in Seattle was a reaction to the same kind of stimulus. He was right.

There are many examples. But the point is always the same and it is simple: give the customer what he or she wants (or as close to it as you can get.) Until you can provide eternal life, you will always fall a little short anyway. Of course, creating the product or service is much more complex than discovering what it is.